On finding capable founders
Hi Dani. I've been talking to more people in our circled about the 'why no flying cars?' problem...
One of my friends thinks we're seeing this because there are few new good ideas for companies. But this seems unlikely. <Insert list of company ideas that no one has even seriously attempted yet.>
Another one thinks that VCs will only fund social-mobile-local-app companies, and this is certainly true for a lot of them. But the amount of money in VC is so small by macroeconomic standards that a handful of rich people could solve this single-handedly, and certainly (as far as I know) Bill Gates isn't a slave to Silicon Valley fashion.
A third I told your theory to - Thiel/Khosla/Gates/Musk/etc. will invest in good people, but they can't find any, or at least not as many as they have money to invest. His opinion is that there are plenty of capable people, but that the leaders of Silicon Valley don't see them - they are "filtered out" before they even get a meeting.
Looking at the 'filters' in more detail:
- Immigration is obviously one that's been discussed extensively. I think there's a general tendency to err on the side of "therefore, let's all lobby Congress for... " when problem-solving, both because a) people like political fights and b) our heuristics were mostly formed when Congress was more functional. (See eg. Eric Drexler's unsuccessful decade-long battle to get public funding for his research.)
The obvious alternative is to establish more tech hubs outside the US. This requires solving chicken-and-egg problems - no one wants to move till other people have moved - but this seems more doable than the "getting Congress to pass controversial legislation despite not being able to keep the government's lights on" problem. The obvious counter-argument is that this would be 'giving up' in a sense; making immigration restrictions less bad gives us less incentive for repealing them. The obvious counter-counter-argument is that this is (to my knowledge) what created the problem in the first place. When someone proposes, eg., the startup visa, which would make immigration policy less bad, my understanding is that it often gets shot down on the theory that it will create less incentive to fix other problems with a comprehensive solution. But if Congress's bill-passing ability trends broadly downward with time, as I think it does, then the correct move is to grab whatever you can now, as the chances of getting everything you want in a comprehensive reform go down with time.
- The Silicon Valley network itself might be another filter; if eg. Elon Musk meets with X new people on an average day, then a lot depends on how those X people are selected. I have no idea how Elon selects people to meet, so I don't know how big of a problem this is. But if (making something up) he is much more likely to talk to you if you worked for Goldman Sachs, then the quality of people he funds is limited not by him but by Goldman associates, who probably do a much worse job.
I think a lot of the success of Y Combinator can probably be attributed to the open-application model, as opposed to the you-need-a-personal-introduction model. Certainly the former has its problems; eg. in a desire to systematize searching through a giant application pile, you might pick only startups in field X while ignoring rapidly growing field Y.